Personal Finance Blog for Retirement and Investment Advice

How to Trade In Your 401(k) for an Increasing Guaranteed Income for Life

Jason is 53 years old and just changed jobs. He’s facing two retirement planning dilemmas…

  1. He has $830,000 in his 401(k) from his previous job and wants to move it where it gives him more guarantees that he and his wife, Julie, won’t outlive their money in retirement.
  2. He had been putting $19,000 a year into his old 401(k) and wants to continue socking away that much. But in the last couple of years he experienced several downsides to 401(k)s that have soured him on the idea of continuing down that path.

The Five 401(k) Drawbacks Jason Discovered…

Drawback #1: When the pandemic hit, Jason’s employer stopped doing any matching contributions, which had been a big incentive for him. He’d forgotten the employer match isn’t guaranteed.

Drawback #2: As Jason gets closer to retiring, he has much less of an appetite for risk and volatility. What if the market crashes again shortly before he plans to retire in 14 years at age 67?

He’d been saving diligently in a 401(k) for 29 years already, and his average annual return had been less than 6%! Sheesh! All those sleepless nights and heart-stopping crashes… for less than 6% a year?!? He wondered if a monkey throwing darts couldn’t have done better than that… [Read more…] “How to Trade In Your 401(k) for an Increasing Guaranteed Income for Life”

A Surprising Solution to the 15-Year vs 30-Year Mortgage Dilemma

Jon and Jen have an opportunity to buy their dream home and lock in a historically low interest rate. This is a pretty common scenario in today’s market. In fact, you may be thinking about buying a home or refinancing your mortgage to take advantage of today’s low rates. If so, here’s a powerful option to consider…

Jon and Jen are trying to decide whether a 30-year mortgage or a 15-year mortgage makes the most sense. Their mortgage broker showed them that even with an interest rate just 0.65% lower, the 15-year mortgage would save them almost two-thirds of the interest of a 30-year loan.

They decided the 15-year mortgage made the most sense. Their thinking was, “We’re both 48 now, and we plan to work until we’re 70. The sooner we get the house paid off, the sooner we can save more for the future. Plus, we really like the idea of saving almost $90,000 in interest.” [Read more…] “A Surprising Solution to the 15-Year vs 30-Year Mortgage Dilemma”

How to Never Run Out of Money in Retirement – the Solution Top Experts Recommend

Would it surprise you to know that the #1 retirement fear is running out of money – a fear shared by fully half of Americans? That’s according to a recent study by the Aegon Center for Longevity.

People are deathly afraid of running out of money in retirement for good reason, experts say…

Over the last 40 years, there has been a dramatic shift away from company pension plans that promised workers a certain amount of money every month in retirement for as long as they lived.

Instead, there’s been a seismic shift toward do-it-yourself, cross-your-fingers, hope-and-pray retirement planning strategies like 401(k)s and IRAs. [Read more…] “How to Never Run Out of Money in Retirement – the Solution Top Experts Recommend”

New Survey Reveals Majority of Americans Now Live Paycheck-to-Paycheck Due to COVID-19 Pandemic… Here’s How to Avoid That

A new survey from Highland Solutions revealed some startling stats about Americans’ spending habits during the pandemic. How many of these describe your situation?

  • 63% are living paycheck to paycheck
  • 47% have run out of their emergency savings
  • More than one-third have opened up a new credit card since the pandemic to help cover expenses
  • 42% have taken on more debt than normal, and nearly a third have racked up over $10,000 in new debt (a recipe for disaster)
  • 82% could not cover a surprise $500 expense
  • 67% regret not having enough savings before the pandemic hit

So How the Heck Did We Dig Ourselves into this Debt Hole?

For starters, you only need to look no further than the conventional advice about emergency funds. [Read more…] “New Survey Reveals Majority of Americans Now Live Paycheck-to-Paycheck Due to COVID-19 Pandemic… Here’s How to Avoid That”

Taxmageddon is coming – Here’s How to Protect Yourself

President-elect Joe Biden has repeatedly said he will increase numerous taxes and eliminate the Trump tax cuts on “day one,” which would impose a $2,000 annual tax hike on a median-income family of four.

He has promised to as much as double the capital gains tax rates on your investments.

Biden/Harris have proposed canceling student loan debt and are being encouraged to do that by executive order as soon as possible. It would add hundreds of billions of dollars to our already-skyrocketing national debt.

In reality, there’s no such thing as “canceling” or “forgiving” student debt – they can call it anything they want, but it simply means sending the bill to the taxpayers.

Biden wants to raise the corporate tax rate by 33%. [Read more…] “Taxmageddon is coming – Here’s How to Protect Yourself”

What Fairy Tales and Myths is Your Financial Advisor Feeding You?

I’ve spent the last two decades proving there are many investing and retirement planning myths, lies, and fairy tales that most people and financial representatives blindly accept as fact.

It’s really not their fault. Wall Street spends billions of dollars every year to brainwash us.

As the late President John F. Kennedy observed…

The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth – persistent, persuasive, and unrealistic. Belief in myths allows the comfort of opinion without the discomfort of thought.”

Here are 3 fairy tales you’ve probably heard from your financial advisor and the facts about each:

Fairy Tale #1: You Must Risk Your Money in Order to Grow an Adequate Nest-Egg

This is undoubtedly Wall Street’s BIGGEST lie. [Read more…] “What Fairy Tales and Myths is Your Financial Advisor Feeding You?”

The 5 Biggest Threats to Your Retirement Security Today

Recent studies and surveys show that pre-retirees and retirees fear these five threats to their retirement finances most – and with good reason. Which of these keep you up at night?

Retirement Security Threat #1: Outliving Your Money

This is such a big and scary threat that some people say they would rather die before their time than run out of money.

Unfortunately, the likelihood of outliving your money is all too real. The average 65-year-old will outlive their savings by almost a decade, according to a recent study by the World Economic Forum.

To determine how much money you’ll need to have saved by the time you retire, a good guideline is the “Rule of 25,” which says you should multiply your total annual expenses by 25. By that measure, to have $100,000 per year (don’t forget to adjust for inflation) to spend in retirement, you’ll need to save $2.5 million.

It’s also important to consider that you may well live longer than you imagine, and studies show people tend to underestimate their life expectancy.

Retirement Security Threat #2: Market Risk

[Read more…] “The 5 Biggest Threats to Your Retirement Security Today”

Why the Best Way to Get Cash Fast is a Bank On Yourself Policy Loan

When the Coronavirus pandemic and shutdown hit, millions of people found themselves out of a job, and many others had their hours and pay cut.

The government stepped in to provide stimulus, but many people had to wait weeks or even months to receive it.

And just when many people needed fast access to cash, charge card limits were reduced or even canceled without warning.

As Mark Twain wryly noted…

A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.”

Bank On Yourself Comes to the Rescue…

When you need fast access to cash, what’s the fastest and easiest way to get it? A Bank On Yourself policy loan because it’s money you can get your hands on: [Read more…] “Why the Best Way to Get Cash Fast is a Bank On Yourself Policy Loan”

Why More Experts Are Now Saying It’s Time to Ditch Your 401(k)

A growing number of retirement planning experts are joining the chorus of people saying 401(k) plans no longer make sense for savers in recent articles on Motley Fool, Bloomberg, MarketWatch, and other major publications.

They’re lamenting that one of the biggest appeals of the 401(k) – the ability to make contributions with untaxed dollars in exchange for tax-deferred growth and withdrawals – is disappearing.

The national debt was already skyrocketing before the pandemic spurred the biggest fiscal stimulus programs in history. And a surge in unemployment has lowered tax revenue for federal and state governments.

What do governments typically do to counter budget deficits?

They raise taxes, of course!

And as taxes rise, deferring them in a 401(k) or IRA means you’ll pay more later – potentially a lot more.

Even before the pandemic, the Center for Retirement Research said people lose 25%-33% of the value of their 401(k) to taxes… and most people are shocked when it happens because they forget they’ll owe the IRS taxes on every penny they’ve put in and every penny of growth they’ve deferred.

Do you know what the tax rates will be in 20 or 30 years from now? For that matter, do you know what they’ll be next year or in two years?

[Read more…] “Why More Experts Are Now Saying It’s Time to Ditch Your 401(k)”

72% of Americans Are Stressed About Money – Here’s How to Break Free of It

If you’re feeling stressed about money thanks to the Coronavirus pandemic and shutdown, you’re not alone.

72% of Americans report feeling stressed about money within the last month, according to a new survey by the American Psychological Association. It doesn’t help that 35% of Americans can’t last even one month on their savings, according to the July 2020 Retirement Confidence Index.

So how did we get here… and what can you do about it?

Among the many bits of wealth-killing conventional financial “wisdom” is the recommendation that you have an emergency fund equal to 3 to 6 months of your household expenses.

Almost every financial “expert” parrots this advice, even though millions of Americans were out of work for more than a year in the last major recession!

So here’s a 3-step plan to move towards a financially stress-free life…

Step #1: Start Working Towards a Safe and Liquid Emergency Fund Equal to Two Years of Your Household Expenses

[Read more…] “72% of Americans Are Stressed About Money – Here’s How to Break Free of It”